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Same-Sex Marriages Will Be Recognized for Federal Tax Purposes

On August, 29, 2013, the Department of the Treasury and the Internal Revenue Service (IRS) together issued a news release along with Revenue Ruling 2013-7 addressing federal policy changes with regards to same-sex couples. While many details are yet to be ironed out, the federal pronouncements clarify that same-sex couples-legally married in a state or country that recognizes their marriage-will now be treated as married for federal tax purposes. Furthermore, the pronouncements clarify that a same-sex marriage will be recognized for Federal tax purposes if the same-sex marriage was valid in the state or country where it was entered into, regardless of whether the couples marriage is recognized in a subsequent place of residence. While these pronouncements represent a major shift in federal tax policy concerning same-sex couples, it is important to note that registered domestic partnerships, civil unions, and other formal-non-marriage-relationships recognized under state law will still not be recognized as marriages for federal tax purposes.

The Department of Treasury and IRS will begin applying the terms of Revenue Ruling 2013-17 on September 16, 2013. Revenue Procedure 2013-7 states that the Treasury and IRS intend to issue further guidance on how qualified retirement plans, and other tax-favored arrangements (presumably including IRAs) should treat same-sex spouses for periods prior to the September 16th effective date, as well as guidance to plan sponsors regarding required plan amendments and any corrections that may be necessary relating to past plan operations.